Keokuk, Iowa, mulls $500,000 offer for railroad bridge

At least three parties
have expressed interest in purchasing the city of Keokuk's swing-span railroad
bridge, which connects the southern Iowa town to Hamilton, Ill., the Burlington
Hawkeye reports. After years of searching for a company willing to buy the
bridge, city officials find the abrupt attention to the structure to be a
refreshing change of events.

The recent interest in
the bridge includes a $500,000 offer from Chicago businessman Craig Burroughs
on behalf of Anchorage, Alaska-based Pacific Rim Railway Co.

"That is the first
offer we've had where we don't have to pay somebody to take it," Keokuk
Public Works Director Gerald Moughler said with a quick laugh.

Before Burroughs' offer,
the next best proposition the city had came from Keokuk Junction Railway Co.,
which said it would assume control of the bridge if the city gave it to
short-line railroad. A controlling majority of Keokuk Junction Railway stock is
owned by Peoria, Ill.-based Pioneer Rail Corp.

Burroughs discussed his
offer with the city council at its regular meeting in early March.

On Monday, Mayor Tom
Marion received two more calls about purchasing the bridge. The first call came
from Pioneer Rail, which wants to discuss revising its offer. The second call
came from a Florida businessman with 31 years in the rail industry, Marion
said.

Burroughs has been
working with city officials and local industry leaders for seven months to hash
out a deal for the bridge, he said during an interview. Purchasing the bridge
would be the first step in Pacific Rim setting up operations in Keokuk.

"Our objectives are
to build a large vertically integrated corporation with roots in Keokuk that
will enable us to make a difference in the railroad business, get involved in
high-speed railroading and building railway equipment and supplies,"
Burroughs said. "We'd like to start up a company that builds and repairs
rail cars, refurbishes locomotives, builds railroad tracks. In other words, do
as many of the activities related to railroad operations as possible to cut out
the middleman and make it more efficient. The bridge is just a starting point.
It gets us started in Keokuk, and it gives us a viable tenant in the Keokuk
Junction. We have already held some discussions with the people at Pioneer Rail
Corp., which owns the Keokuk Junction, and we plan on working cooperatively
with them."

Keokuk Junction, the only
business that uses the bridge, is displeased at the prospect of the city
selling the structure to another company.

"We're not happy
about it," said Dan LaKemper, general counsel for Pioneer. "We think
selling the bridge to a third party such as this would be a bad thing for the
city, a bad thing for the shippers, the local industry and obviously the
railroad."

LaKemper argues Pacific
Rim wants to purchase the bridge to make money off Keokuk Junction Railway and
said increased bridge fees would lead to higher shipping rates and less
competitive industries in Keokuk.

"There is nothing
that is going to be added in terms of value," LaKemper said. "He is
just going to put up a toll booth on the bridge."

Currently Keokuk Junction
pays the city $20.79 per car that crosses the bridge. Keokuk Junction, which
owns the tracks on either side of the bridge, has two customers in Keokuk,
Roquette America Inc. and Griffin Wheel, which are two of the city's largest
employers.

At the council meeting,
Burroughs said he wants to close on the bridge deal within 30 days, pending
approval of the Surface Transportation Board. But city council members likely
would not make a decision on whether to sell the bridge that quickly. Officials
first want to study Burroughs' offer and ensure it's not too good to be true,
Marion said.

Burroughs has offered to
pay the $500,000 on a 10-year note with 4 percent interest with a balloon
payment at the end of that time to pay off the remainder, Marion said. As a
show of good faith, Burroughs has deposited $50,000 in an account at First
Community Bank in Keokuk.

Also, the city has a
$3.2-million fund for use in case the bridge ever needs to be demolished.

Burroughs has proposed
putting those funds into an escrow account with an Iowa bank. Neither the city
nor Pacific Rim would be able to touch the $3.2 million for 10 years, but the
interest from the account would be used for bridge upkeep. At the end of the 10
years the $3.2 million would revert to the city.

Born and raised in the
northeastern Iowa town of Greene, Burroughs said he received his first taste of
the railroad business fresh out of high school working for the now defunct
Chicago, Rock Island and Pacific Railroad. In 1971, he started his
first shortline railroad company, East Camden & Highland Railroad Co. based
in Camden, Ark. Burroughs said he has served as president of six short-line
rail companies and been involved in or consulted for the purchase or creation
of another 18 rail companies.

Burroughs also is
chairman and CEO of Northern Inter-Continental Enterprises, an Anchorage,
Alaska-based company with the goal of establishing a high-capacity electrified
railroad across Alaska and Siberia connected via a tunnel built under the
Bering Strait. Burroughs' plans for the $87 billion project are laid out at the
Web site www.railwaytotomorrow.com.